Bounce Back Loan Repayment Terms Extended To 10 Years
Pay as You Grow (PAYG) repayment flexibilities enable borrowers to tailor their repayment schedule, with the option to extend the length of their loans from six to 10 years (reducing monthly repayments by almost half), make interest-only payments for six months or pause repayments for up to six months.
his will mean that businesses can choose to make no payments on their loans until 18 months after they originally took them out.
Businesses first began to receive the loans in May 2020 and the first repayments will become due from May 2021 onwards. This is in addition to the government covering the costs of interest for the first year of the loan.
Lenders will proactively and directly inform their customers of Pay as You Grow, and borrowers should only expect correspondence three months beforetheir first repayments are due.
It will provide businesses with the following options:
- extend the length of the loan from six years to 10 at the same fixed interest rate of 2.5%;
- make interest-only payments for six months, with the option to use this up to three times throughout the loan; and
- pause repayments entirely for up to six months. This option is available once during the term of the Bounce Back Loan.
VAT deferral payment scheme online service opens
In order to take advantage of the new payment scheme businesses will need to have deferred VAT payments between March and June 2020, under the VAT Payment Deferral Scheme. They will now be given the option to pay their deferred VAT in equal consecutive monthly instalments from March 2021.
Businesses will need to opt-in to the VAT Deferral New Payment Scheme.
Deferred VAT can be paid in two to 11 consecutive instalments starting in March, April, May or June 2021, without adding interest.
To join the scheme portal click here
In order to qualify and opt into the new payment scheme, you must:
• join the scheme yourself, your accountant cannot do this for you
• still have deferred VAT to pay
• be up to date with your VAT returns
• join by 21 June 2021
• pay the first instalment when you join
• pay your instalments by Direct Debit.
Eligible businesses that are unable to use the online service can ring the HMRC Coronavirus Helpline on 0800 024 1222 to join the scheme until 30 June 2021.
More help with self-assessment tax bills
HMRC has announced that self-assessment taxpayers won’t be charged the automatic 5% late payment penalty if they pay what they owe for 2019/20 or set up a payment plan by 1 April 2021.
Normally, a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3 March following the end of the tax year. But this year, because of the impact of the pandemic, HMRC is giving taxpayers more time to pay or set up a payment plan.
You can pay your tax bill or set up a monthly payment plan here. You need to do this by midnight on 1 April to prevent being charged a late payment penalty
Off payroll rules
Changes will be introduced from 6 April 2021. HMRC has confirmed that it will not issue penalties for inaccuracies in the first 12 months of the regime, unless there is evidence of deliberate non-compliance.
HMRC also confirmed that it will not use information it receives under the expanded regime to open new compliance enquiries into returns for tax years before 2021/22, unless there is reason to suspect fraud or criminal behaviour.
The new tax rules will see the extension to medium and large organisations in the private sector. These reforms will shift the responsibility for assessing employment status to medium and large organisations engaging individuals via a personal services company.
Please click on link: GOV.UK
Domestic VAT reverse charge
The change applied from 1 March 2021 and changed the way VAT is payable on building and construction invoices as part of a move to reduce fraud in the sector.
From March 2021, the person receiving the supply of services, not the supplier of services, who accounts for the output VAT on those services.
The recipient deducts VAT due on the supply as input VAT, subject to normal VAT rules. In most cases, no net tax on the transaction will be payable to HMRC.
This new procedure will apply right the way up the CIS supply chain until you reach end users/intermediary suppliers, the supply defaults to normal VAT rules, so long as the end user/intermediary supplier correctly evidences their status.
The Domestic Reverse Charge (DRC) applies to most supplies of building and construction services, which are:
- standard or reduced rated supplies
- where both parties are registered for VAT in the UK
- and payments for the supplies are required to be reported via the Construction Industry Scheme.
The DRC does not apply to:
- zero rated supplies
- services supplied to end users or intermediary suppliers, so long as these have provided written confirmation of their status to the supplier
- employment businesses supplying either staff or workers.
Please contact us for advice on the DRC and how it impacts your business.
Please click on link: GOV.UK